Much easier to understand energy prices if it was always talked about in terms of price per unit

What_time_is_it

When price increases happen they are always talked about in terms of an extra £x per year. But unless the prices are fixed for at least one year this is a very misleading and confusing figure to use. The increases in the price cap for energy today will almost certainly be followed by a decrease in July, and it looks very likely that the energy price over winter 2023/24 will be cheaper than the price for April-June 2023. Plus, usage will be very low for most people during the expensive period. I don't think bills will increase by £500 for anyone this coming year unless their usage increases. So why is it reported as an extra £500 on bills? 

I'd compare it to the price of petrol - a similar product in terms of how its price fluctuates. Nobody ever says that the price of petrol has increased by £500 a year, unless it's a retrospective look at the previous year's costs. Petrol prices are reported in terms of unit prices, the price of a tank, the cost over a week, etc - in other words, the price now.

I think that the current way of discussing energy prices is confusing for the vast majority of people and adds to a sense of helplessness and lack of agency that can become overwhelming for many.

michaels

And yet apparently it is done because people find standing charge and pence per unit too complicated to understand?!

[Deleted User]

A few years ago, all tariffs had what was called a Tariff Comparison Rate (TCR) which took into account the standing and unit charges. Ofgem did away with it as price comparison websites will always give the lowest cost provided the calculation is based on accurate kWh/year.

As we are now moving to smart meter price comparisons based on a 12 month data pull from the meter, I doubt that we will see TCR coming back anytime soon.

Alnat1

If unit prices were talked about more in the news then the majority of people would begin to understand and compare it that way.

Mstty

Something many on this forum are fully behind as they have educated themselves in this way and are knowledgeable.

I suspect more people are now more knowledgeable in this area with the price hikes but some still won't be able to deal with energy announcements in that way unless someone like Martin Lewis educates the nation.

dunstonh

And yet apparently it is done because people find standing charge and pence per unit too complicated to understand?!

For several generations, the position has been to dumb down rather than educate up.  

MikeyPGT

Even more confusingly is the use of the 'average' household bill.  What is the average household bill for food/cars/clothes?  Personally I use very little actual gas or electricity - well over 90% of my gas bill is the standing charge and about a third of my electric ...

Alnat1

It's all really what we are fed by the media and has nothing to do with the intelligence of the public. 

My son and his gf, who both have maths degrees, think the IHD is the smart meter. They assume they are the "average user" and their bills will be around the headline £2500. They do however realise they can pay more/less if they adjust usage.

[Deleted User]

MikeyPGT said:

Even more confusingly is the use of the 'average' household bill.  What is the average household bill for food/cars/clothes?  Personally I use very little actual gas or electricity - well over 90% of my gas bill is the standing charge and about a third of my electric ...

The same can be said for many service we buy. For example, a mobile phone contract: 2GB's worth of data might cost £6/month and 12GB just £8/month. The network has be maintained and this costs money.

MikeyPGT

[Deleted User] said:

MikeyPGT said:

Even more confusingly is the use of the 'average' household bill.  What is the average household bill for food/cars/clothes?  Personally I use very little actual gas or electricity - well over 90% of my gas bill is the standing charge and about a third of my electric ...

The same can be said for many service we buy. For example, a mobile phone contract: 2GB's worth of data might cost £6/month and 12GB just £8/month. The network has be maintained and this costs money.

My point was that it affects the calculations of how much any percentage increase will be - a larger increase in the price per unit will affect high users more than low users.

Spoonie_Turtle

The other side of it is if they start talking in national averages, you'll get people complaining they are being "ripped off" because their unit rate and/or standing charge are higher than the mathematical average (especially with the electricity standing charge, where every region differs wildly and none of them pay the quoted average).

The current way is not helpful though, I completely agree.


Edit: national, not regional *facepalm*